Promise of more rewards for more productivity unfilled Employers failed to honor their end of the deal.

April 29, 1992|By Charles Stein | Charles Stein,Boston Globe

It was a bargain that held for 30 years: U.S. blue-collar workers produced more and in return were rewarded with higher wages.

But in the 1980s employers failed to live up to their end of the bargain.

Despite a solid 26 percent gain in manufacturing productivity, workers saw their real wages -- adjusted for inflation -- fall by 8 percent during the decade, according to a new study. Instead of boosting salaries, the productivity gains were used to keep prices low in the face of harsh international competition.

Andrew Sum, an economics professor at Northeastern University's Center for Labor Market Studies and author of the study, said the "severed link" between productivity and wages is "a broken promise."

In a paper with that title, Mr. Sum wrote, "Workers have consistently been told by economists, managers, politicians and presidential candidates, including Sen. Paul Tsongas, that their real wages are dependent on their ability to produce more."

If blue-collar workers produced more, why do they have nothing to show for it in their checks?

The answer is complex. The weakness of labor unions pushed wages down. Rising prices for services, such as college tuition ,, and medical care, ate up what meager wage increases factory workers won, in effect whittling away purchasing power.

But the critical new force today is international competition.

In a world filled with hard-charging rivals, many of them from low-wage countries, U.S. manufacturers say they must hold down costs to retain market share.

Caterpillar Inc. is a classic example of what happened to U.S. manufacturing companies in the 1980s. And that has a lot of people wondering whether blue-collar workers will ever share in the nation's economic progress, no matter how well they perform.

For the past decade, Caterpillar has held its own against international competitors, including the Japanese. The Illinois company produces more construction equipment with a

smaller work force than it did 10 years ago. Caterpillar says its productivity -- measured as output per worker -- is the highest in the industry.

But when unionized workers demanded a share of those gains last fall, the company said no. And after successfully weathering a bitter five-month strike that captured the attention of the nation, the company is still saying no.

Management's message is clear: Business pressures require that advances in productivity be plowed back into lower prices. More money for the workers can't be spared.

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